Posttranslational acylation of rhodopsin has been observed in both bovine and rat retinas. Detergent solubilized bovine rod outer segments have been employed to study the kinetic paramenters of the acyltransferase activity which exhibited a Km of 40 MuM for palmitoyl coenzyme A. No direct, short-term effects of light were found. Analysis of purified bovine rhodopsin revealed the presence of up to two moles of fatty acid per mole of rhodopsin, the major species being palmitic acid. Both in vivo and in vitro experiments with rat retinas revealed incorporation of palmitate into newly-synthesized opsin in rod inner segments as well as into mature rhodopsin in rod outer segments, suggesting the existence of a fatty acid replacement mechanism. Palmitic acid also labeled phospholipids in the outer segment, principally phosphatidyl choline, which remained highly labeled long after a complete outer segment renewal period, suggesting an extensive turnover and reutilization of phospholipid components. One by-product of phospholipid turnover is cytidine monophosphate. Gradient purified rat and bovine rod outer segments contain an active phosphatase which cleaves this nucleotide with a high degree of specificity in a manganese-dependent manner. This activity has been localized by histochemical techniques to the tips of rat rod outer segments, suggesting a role for this activity in photoreceptor shedding.